A small break on student loans

Mark Wilson/Getty ImagesHouse Speaker John Boehner (R-OH), speaks to reporters during a press briefing at the U.S. Capitol, earlier this month. Today Boehner told reporters the House U.S. House Republican leaders plan to combine a multiyear highway bill with a one-year freeze for government subsidized student loan rates.

We’ve lost count of the stories about 20-somethings still living at home with their parents. This generation of college graduates has faced a double whammy: Jobs are scarce or low-paying, when they can find them. And they have an enormous debt hanging over them.

The median college loan debt is $20,000,
according to “Chasing the American Dream: Recent College Graduates and the Great Recession” by Rutgers University’s John J. Heldrich Center
for Workforce Development. The survey found
student loan debt in 2010 topped $1 trillion,
exceeding what Americans owe on credit cards.

That’s why reports that Congress is close to a bipartisan deal that would hold down interest rates on new federally subsidized college loans is cause for some optimism. Without the deal, those rates would double from 3.4 to 6.8 percent, beginning July 1, for 7.4 million students. Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.) have struck a deal they believe will be acceptable to House Republicans.

It’s not a complete victory for beleaguered students. The lower interest rate would remain in effect only until next June, when another extension would have to be legislated — no doubt in another political wrestling match.

Also, those students taking out these new subsidized loans will have to start paying the interest immediately upon graduation; in the past, the federal government picked up that tab for the first six months. And grad students will no longer be eligible for federally subsidized loans.

Even a stopgap deal that cuts corners is good news, though, given how polarized Washington is today. But it’s nuts that, at a time when the economy demands more educated workers, America has made it harder for students to lay a foundation for the kind of secure future that moves them out of their old bedroom and into the real world.